The Competition Commission (CC) announced its provisional findings into the Payment Protection Insurance market yesterday, stating that “Companies face little or no competition when selling PPI to their credit customers and as a result customers appear to be overcharged by over £1.4 billion a year”. This follows its 15 month investigation into the market following referral from the Office of Fair Trading in Feb 2007, itself a knock on effect of Citizens Advice’s Super Complaint in Sep 2005.
The CC’s report has announced a number of proposals to protect consumers in the future, including a possible ban on single premium polices and temporary price caps, some of which may start to come into place later this year. In the meantime Martin Lewis, creator of MoneySavingExpert.com says:
“It’s great to see a big beast like the Competition Commission getting its teeth into the PPI market. We’ve seen so many consumers have money ripped out of their pockets. PPI is big business, when you get a loan, the lender is usually making more money from the insurance than the loan. Yet as it's hidden in the repayments, people don’t realise they’re paying £1,000s over the loan's life.”
“Bank staff are drilled to push this insurance, even when it's not necessary, or worse still when the cover is totally inappropriate and doesn’t actually buy any protection. Even when people try not to get policies they’ve been told if they want to get a loan, they need to get the PPI too, which is not true.”
“The entire loan insurance market has huge systemic problems; I wouldn’t be surprised if half the 20 million PPI policies in the UK had been missold and would urge anyone who has got a loan in the last six years to check whether they’ve got one of these policies and if they have, whether they were missold on it.”
Full details on how to check if you were missold, how to reclaim and free template letters in the PPI Reclaiming article.